دانلود رایگان مقاله انگلیسی ارتباطات سیاسی سرمایه گذاری مخاطره آمیز و مدیریت درآمد IPO - الزویر 2018

abstract

We examine the effect of VC political connections on accrual and real earnings management (EM) of IPOs controlled by private entrepreneurs in China. We find IPOs backed by government-controlled VCs exhibit severe IPO-year EM, which is driven by those VCs exiting their investments immediately after the VC lock-up expiration. In contrast, IPOs with politically connected private VCs have lower IPO-year EM and are not associated with VC exits. Therefore, IPOs with government-controlled VCs who immediately exit their investments are most likely to engage in ‘window-dressing’ of financial performance, and to have poorer long-run stock performance. The results remain unchanged after a battery of robustness tests.

6. Conclusion

This study analyses the effect of VCs on IPO-year EM of 885 entrepreneurial firms in China. The results show that IPO issuers backed by government VCs exhibit severe IPO-year EM. The opportunistic IPO-year EM is predominantly found in firms that experience exits by the VC immediately after the lock-up expiration. Therefore, those IPOs with VCs whose apparent intention is to exit their investments as soon as possible are most likely to engage in ‘window dressing’ of financial statements and performance during the IPO process. Such IPOs also tend to experience lower stock returns two years after listing. On the other hand, IPOs backed by private VCs with political connections are associated with lower EM and better long-run stock performance, suggesting that private VCs with political connections provide some oversight of management activity. The key results remain unchanged after robustness checks.